The present invention relates in general to e-commerce systems and in particular to dynamic repricing of online subscription services.
Online merchants may sell goods and services by means of an online subscription. Such methods automatically deliver a predetermined “replenishment” quantity of units of a good or service during each “replenishment” period throughout a fixed term of the subscription.
For example, if a merchant offers to sell a vitamin pill by subscription, a subscribing customer might automatically receive a bottle of thirty two-pill “servings” of the vitamin on the first day of each monthly replenishment period of a twelve-month subscription term. The subscription would automatically transfer a payment or invoice a subscriber each month for a corresponding 60-pill replenishment.
A unit price for this subscription may be determined by any known means. For example, if a “unit” is defined as a single serving, an automatic $30 “replenishment” billing at the beginning of each one-month replenishment period would result in a $1.00/serving unit price. But defining a unit as a single bottle would result in a $30 unit cost, and as a single pill would produce a $0.50 unit cost.
An online merchant may permit a subscribing customer to cancel a subscription at any time. This, however, creates a risk of a prematurely terminated subscription any time that a subscriber finds a lower price during the term of the subscription. A merchant's ability to competitively reprice a subscription mid-term is thus an important method of preventing churn.
Existing computerized e-commerce subscription systems have limited repricing features that at most merely notify a subscriber that a price of a current subscription has been lowered to match that of a competing price. This competing price may comprise a combination of events like a drop in a wholesale price, a manufacturer promotion, a competing merchant's announcement of a lower-priced offer, or a new promotion by the merchant offering the current subscription.
Existing e-commerce systems suffer, however, from an inability to compare prices when a potentially competing offer does not offer exactly the same product as the subscribed product, offers a product in a different quantity, comprises multiple products or sales incentives, or comprises a subscription that specifies a different replenishment period, a different term, or a different replenishment cost.
For example, known e-commerce systems cannot determine that a one-week third-party promotion that offers 200 servings of a product for $35 is a better bargain than a $20/month subscription that provides 100 servings/month. Similarly, such systems could not determine that an offer to sell a bottle of 100 1000 mg brand-name supplements for $10 is a better choice than a bottle of 50 generic 500 mg supplements for $3.
This technical problem of known e-commerce systems is detrimental to online merchants because the problem prevents the systems from automatically repricing a current subscription when a competing offer specifies a product that is equivalent to, rather than identical to, a subscribed product, includes incentives or other products not comprised by a subscription, or that offers a product in a different quantity or different serving size than that of the subscription. These problems exist even when a competing offer is a subscription that comprises a replenishment period, serving size, or replenishment amount that differs from that of the current subscription.
This technical limitation thus reduces the ability of e-commerce systems to avoid premature termination of a subscription by dynamically repricing the subscription in response to a competing offer.